Irish mortgage rates fell to a 20-month low in December, according to Central Bank of Ireland figures, as the gap between average rates available here and the EU narrowed.
The average weighted interest rate on new mortgages in the Republic was 3.8 per cent, down 0.17 percentage points from November.
That was the lowest average rate since April 2023, the Central Bank said on Wednesday, some seven months after the European Central Bank (ECB) began hiking its main interest rates in a bid to combat soaring inflation across the single currency area.
The equivalent euro area rate in December declined by 0.8 percentage points to 3.35 per cent, according to the figures.
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Rates vary significantly across the bloc, from as low as 1.85 per cent in Malta to 4.4 per cent in Latvia.
The latest decline meant that lenders in the Republic offered the seventh-highest rates in the euro area on average in December, down from sixth place in November.
Fixed-rate mortgages represented three-quarters of total new mortgage agreements in December, the Central Bank said, with the volume of new agreements jumping 19 per cent to €1.2 billion from December 2023.
The average rate on new fixed loans was 3.62 per cent in the month, down 0.17 percentage points from November and 0.52 percentage points year-on-year.
Darragh Cassidy, head of communications at price comparison website Bonkers.ie, said it was no surprise to see average rates decline with PTSB, Bank of Ireland and others announcing rate cuts in recent months.
However, he said the month-on-month decline of 0.17 percentage points is the largest drop in average rates since the data series began in 2017 and more relief is in sight for Irish borrowers over the coming year.
“It’s likely the ECB will cut rates at least another two times over the coming year, if not more, to try to revive a flagging Eurozone economy,” he said.
“So we’ll see mortgage rates in Ireland continue to ease, especially among the nonbank lenders whose rates are still generally a fair bit higher than the main banks’ rates.”
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The flipside for households in the Republic is that savings deposit rates are also in decline in line with the ECB cuts.
Average household overnight deposit rates decreased by 0.1 percentage point to 0.13 in December, up 0.1 percentage point on December 2023.
However, the weighted average rate on new savings deposits with an agreed term was down to 2.45 per cent, the lowest level since August 2023 and down 0.15 percentage points from November.
Fixed-term deposit rates will fall more over the coming months, Mr Cassidy said.
“Irish households currently have around €160 billion resting on deposit,” he said.
“But the majority of the money is still in accounts that pay little to no interest. So I’d really encourage people with savings to lock into the higher rates while they’re still available.”
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